Land resale barred for SEZ units

New Delhi, Jan 21 | Updated: Jan 22 2007, 05:30am hrs
The government has decided to amend the Special Economic Zones Rules to ensure that developers replace units in SEZs that do not start operations within a year of getting permission. Further, these units will be barred from selling land in SEZs.

According to commerce ministry officials, this will partly address the growing concern among political parties that SEZs are turning into real estate business. "There are units which wait for a year or so for land prices within an SEZ to appreciate and then sell it off to make a fast buck. We will ensure that this does not happen," an official told FE.

The proposed amendments, expected to be notified in a month, will ensure developers failing to get their zones notified within six months of receiving a formal approval not just lose clearance for their projects, but also cough up stamp duty to respective states for the land acquired.

The commerce ministry has asked states to ensure that developerswhich have obtained clearance in principle from the Board of Approvalare exempt from stamp duty not only for initial land acquisition but for all subsequent activities.

THE TERMS

Units failing to operationalise
in a year will lose clearance
Builders to pay stamp duty if they fail to get SEZ notified in 6 months
No tax sop for rehabilitation work outside SEZs
Developers to declare that their land is litigation-free

Besides, the ministry now plans to include a provision, restricting tax exemption on relief and rehabilitation undertaken by developers only to such activities within the SEZ. R&R work undertaken outside SEZslike buildings and schoolswill not be eligible for tax exemption, the official said.

The ministry has decided to ask developers to not only get a non-encumbrance certificate for land acquired but also file a specific affidavit, stating it is litigation-free. "The amendments will specify that units will not be allowed to sell their waste in the domestic tariff area.